Case laws for contract of bailment.

Case 1: Chandmal vs State of Rajasthan (1976 AIR 2373)

Facts: The plaintiff deposited gold with the State Government under an
arrangement to convert it into coins. The government failed to return the
gold.
Held: The court held that this constituted a contract of bailment, and the
State Government, as the bailee, was liable for not returning the bailed
goods. This emphasized the duty of the bailee to return or deliver the
goods as per the bailor’s instructions.
Case 2: Lilly White v. Mannuswamy (AIR 1966 Mad 13)
Facts: The plaintiff gave clothes to a laundry for washing. The clothes
were lost due to theft at the laundry premises.
Held: The court held that the laundry, as a bailee, was liable because it
had failed to take reasonable care of the goods. It reinforced the
principle that the bailee must exercise due care and diligence over the
bailed goods.
Case 3: Shanti Lal v. Tara Chand AIR 1959 Raj 27
Facts: Goods given to the bailee were stolen without any negligence on
the bailee’s part.
Held: The court held that the bailee is not liable for the loss if they can
prove the absence of negligence.

Contract of guarantee

Case 1: Bank of Bihar v. Damodar Prasad (AIR 1969 SC 297)

Facts: A surety executed a guarantee for a loan. The creditor sued the
surety for repayment when the debtor defaulted.
Held: The Supreme Court held that the liability of the surety is co-
extensive with that of the principal debtor unless stated otherwise in the
contract. The creditor is not obligated to exhaust remedies against the
debtor before proceeding against the surety.
Case 2: Central Bank of India v. C.L. Vimla (1995 AIR SC 2358)
Facts: The surety alleged that their consent to the guarantee was
obtained through fraud and misrepresentation.
Held: The court ruled that if a guarantee is obtained by fraud or
misrepresentation, it is void. The burden lies on the surety to prove the
fraud or misrepresentation.
Case 3: State of Maharashtra v. Dr. M.N. Kaul (AIR 1967 SC 1634)
Facts: A surety guaranteed repayment of a loan, but the terms of the
agreement between the debtor and creditor were altered without the
surety’s consent.
Held: The Supreme Court held that any material alteration in the terms of
the contract without the surety’s consent discharges the surety from
liability.

Contract of Indemnity
Case 1: Adamson v. Jarvis (1827) 4 Bing 66
Facts: The plaintiff, an auctioneer, sold goods on the instructions of the
defendant, who did not have title to the goods. The rightful owner sued
the auctioneer for damages, and the auctioneer sought reimbursement
from the defendant.
Held: The court held that the defendant was liable to indemnify the
auctioneer. This case laid down the principle that the indemnifier is liable
to compensate the indemnified for any loss suffered in fulfilling the
indemnity.

Case 2 : Osman Jamal & Sons Ltd. v. Gopal Purshottam (1928 30

BOMLR 24)
Facts: The plaintiff supplied goods under the defendant’s instructions,
who later refused to pay. The plaintiff claimed indemnity.
Held: The court held that the defendant was liable to indemnify the
plaintiff, emphasizing that the indemnifier must cover all losses resulting
from the indemnified party’s actions carried out as per the agreement.
Case 3 : Anwar Khan v. Mohd. Khan (AIR 1967 Raj 229)
Facts: The plaintiff paid a third-party claim under instructions from the
defendant and sought reimbursement under a contract of indemnity.
Held: The court ruled that the indemnifier must compensate the
indemnified for amounts paid to third parties due to the indemnifier’s
instructions.

Contract of Pledge
Case 1: Lallan Prasad v. Rahmat Ali (AIR 1967 SC 1322)
Facts: The defendant borrowed money from the plaintiff and pledged
goods as security. The plaintiff claimed ownership of the goods when the
defendant defaulted.
Held: The Supreme Court held that in a contract of pledge, the pawnee
(pledgee) does not become the owner of the goods but has the right to
retain the goods until the debt is repaid. The pawnee may sell the goods
if the debtor fails to pay but must return any surplus after the sale.

Case 2: National Bank of India v. Sohan Lal (AIR 1962 Punj 534)
Facts: A person who did not own the goods pledged them to the bank as
security for a loan.
Held: The court ruled that a pledge by a person who is not the owner of
the goods is invalid unless they have the owner’s consent or are
authorized by law to pledge the goods.

Case 3 : Sundaram Finance Ltd. v. Noorjahan (AIR 1979 Mad 113)

Facts: A pawnee sold the pledged goods without giving proper notice to
the pledgor.
Held: The court held that the pawnee has a right to sell the pledged
goods in case of default, but the sale must be preceded by reasonable
notice to the pledgor. Failure to do so invalidates the sale.
Contract of agency
Case 1: Syed Abdul Khader v. Rami Reddy (AIR 1979 SC 553)
Facts: The plaintiff entered into a contract through an agent. The agent
acted within their authority, but the defendant refused to honor the
contract.
Held: The Supreme Court held that the agent’s actions within their
authority bind the principal, as the agent acts on behalf of the principal.
This case reinforced the concept that a valid contract of agency requires
the agent to act within their authority.

Case 2: Lilly White v. Mannuswamy (AIR 1966 Mad 13)

Facts: The plaintiff suffered a loss due to the negligence of an agent
(laundry owner) acting on behalf of their business.
Held: The court held that the principal is liable for the acts of their agent,
including negligence, provided the acts were within the scope of the
agent’s authority.

Case 3: Keighley Maxsted & Co. v. Durant (1901 AC 240)

Facts: The agent entered into a contract in their own name without
disclosing the existence of the principal.
Held: The court held that when an agent acts on behalf of an
undisclosed principal, the third party can hold either the agent or the
principal liable upon discovering the principal’s existence.

Doctrine if caveat emptor

Case 1: Ward v. Hobbs (1878) 4 App Cas 13
Facts: The seller sold pigs at an auction without warranty. The pigs had
a disease, which the buyer later discovered.
Held: The House of Lords ruled that the seller was not liable, as there
was no misrepresentation or warranty. The buyer had the responsibility
to inspect the goods before purchasing.
Case 2: Grant v. Australian Knitting Mills (1936) AC 85
Facts: A buyer purchased woolen underwear that caused a skin infection
due to a manufacturing defect.
Held: The court held that the seller was liable because the goods were
not of merchantable quality, violating the implied condition under the sale
contract. This case established that caveat emptor does not apply when
goods do not meet the description or implied conditions of sale.

Case 3: Godley v. Perry (1960) 1 WLR 9

Facts: A child purchased a toy from a retailer. The toy broke and injured
him. The retailer had bought it from a wholesaler based on a sample.
Held: The court held that since the goods did not match the sample, the
retailer could claim damages from the wholesaler. This case shows that
caveat emptor does not apply when a sale is based on a sample that
does not match the delivered goods.

Sales of goods act

Difference Between Sale and Agreement to Sell
Case 1: S.G. Shah v. State of Hyderabad (AIR 1952 Hyd 123)
Facts: The buyer claimed ownership of goods that were yet to be
manufactured.
Held: The court ruled that since the goods were not yet in existence, it
was an agreement to sell, not a sale. Ownership transfers only when the
goods are identified and ready for delivery.

Condition vs. Warranty (Section 12)

Case 2: Wallis, Son & Wells v. Pratt & Haynes (1911 AC 394)
Facts: The buyer purchased seeds labeled as “English Sainfoin” but they
turned out to be of a different type. The seller claimed they only
warranted the seeds to be of a generally good kind.
Held: The court held that the buyer was entitled to damages since the
description was a condition, not a warranty. The goods must match the
description given at the time of the contract.

Right of Unpaid Seller (Section 45-54)

J. H. Rayner & Co. Ltd. v. Hambro’s Bank Ltd. (1943 AC 126)
Facts: A seller demanded payment after the buyer failed to pay. The
goods were in transit, and the seller wanted to stop delivery.
Held: The court ruled that the seller had a right of stoppage in transit
under the Sale of Goods Act

Definition of Partnership (Section 4)

Case: Mollow, March & Co. v. Court of Wards (1872 LR 4 PC 419)

Facts: A group of individuals was engaged in a business but argued they
were not partners.
Held: The Privy Council ruled that a partnership exists when there is an
agreement to share profits and business is conducted in common with a
mutual agency.

Test of Mutual Agency (Section 6)

Case: Cox v. Hickman (1860) 8 HLC 268

Facts: Creditors took control of a business after its owner went into debt.
The question was whether they became partners.
Held: The House of Lords ruled that mere profit-sharing does not
establish a partnership unless there is mutual agency, meaning each
partner can bind the firm.
Minor’s Role in a Partnership (Section 30)

Case: Hardutt Ray Gajadhar Ram v. State of Uttar Pradesh (AIR 1971
SC 1023)
Facts: A minor was admitted to the benefits of a partnership but was
later held liable for firm debts.
Held: The Supreme Court clarified that a minor cannot be a full partner
but can be admitted for benefits. However, upon attaining majority, they
must decide whether to continue as a partner.

Registration of Firm (Section 69)

Case: Jagdish Chandra Gupta v. Kajaria Traders (AIR 1964 SC 1882)

Facts: An unregistered firm sued for contract enforcement.
Held: The Supreme Court ruled that an unregistered firm cannot sue
others for enforcing contracts, as per Section 69 of the Act.

Case laws on partnership act

Liability of Partners (Section 25)
Case 1: M/s. Bhagwanji Morarji Goculdas v. Alembic Chemical
Works Co. Ltd. (AIR 1948 PC 100)
Facts: A partner attempted to deny liability for debts incurred by the firm.
Held: The Privy Council ruled that partners are jointly and severally liable
for firm debts. Any one partner can be sued for the entire debt.
Holding Out as a Partner (Section 28 – Doctrine of Holding Out)
Case 2: Scarf v. Jardine (1882) 7 App Cas 345
Facts: A retired partner’s name was still being used in business
transactions, leading creditors to believe he was still liable.
Held: The court held that if a person falsely represents themselves as a
partner, they can be held liable under the doctrine of “holding out”.

Dissolution of Firm (Section 39-44)

Case 3: Ebrahim v. Nariman Bomanji (AIR 1928 Bom 68)
Facts: Disputes between partners led to a request for dissolution.
Held: The Bombay High Court ruled that serious misconduct or
continued disagreements can justify dissolution of a partnership firm.